When the boardroom dispute at Disney broke into the open last week with the resignation of Walt Disney's nephew, Roy, and Stanley Gold, his investment adviser, the central issue was not what it first appeared to be.

In an open letter to Michael Eisner, the Disney CEO appointed with Roy's backing almost 20 years ago, the heir criticised Eisner for diminishing the brand through a series of missteps and mismanagement.

'Michael Eisner has lost sight of the vision upon which the company was founded,' Disney wrote. 'The focus has shifted to the chase for the quick buck instead of a dedication to new and high-quality ideas.' On a personal note, he added: 'Michael, it is my sincere belief that it is you who should be leaving and not me. Accordingly, I once again call for your resignation or retirement.' Eisner, of course, refused the invitation to resign or retire. Indeed, he let it be known that he found the idea 'absurd' and held an emergency board meeting in New York, after which Disney PRs revealed that Disney board members had spent the first hour of the gathering celebrating Roy's departure.

But what is at stake in Roy Disney and Gold's departure from the company was not in essence the company's immediate performance. Although for years a lagging stock, and one of the first of the media behemoths to prove, through its 1995 acquisition of ABC television, that synergy is at best a tidy concept, Disney reported it had taken more than $3 billion in box office receipts for films released this year.

Roy Disney, the only member of the Disney family still on the board of directors, regards himself as the rightful heir to Walt's creative legacy; Eisner, by virtue of his own idealisation of the great man, regards himself as the rightful inheritor and for seven years has successfully fought off shareholder demands that an order of succession should be put in place.

During his tenure, Eisner has cost the company dearly for his refusal to countenance a diminution of his position. His protégé, Jeffrey Katzenberg, left the company in 1994 after being denied the number two post by Eisner and initiated a suit that ended with Katzenberg being awarded nearly $250 million. Two years later, Eisner appointed the controversial talent agent Michael Ovitz to be his deputy. That relationship ended in a costly feud when Eisner refused to delegate and Ovitz resigned.

For Roy Disney, 73, the decision to resign comes after two years of conflict with Eisner. Within the company, Eisner's camp has successfully diminished Roy's reputation. Disney realised he was slowly being marginalised within the company, and points to the company's decision five years ago to close its Submarine Voyage ride at Disneyland without warning him. To many, Walt's nephew has a point. Despite Disney's record box office this year - largely as a result of Finding Nemo and Pirates of the Caribbean - the brands and products for which it is best known - Mickey Mouse, the theme parks - are looking over-priced and shoddy to many consumers.

Charges that Disney has lost its way under Eisner are not new, but the departure of the final Disney family member from the company has given the criticism new weight. Disney's core animation and theme-park businesses have been battered by the competition, and it stands accused of pushing profits over innovation and quality.

For evidence of weakness, critics point to numerous straight-to-video sequels of Disney's classic titles such as Cinderella and Aladdin. Some detect that by living on its ability to trade on past glories, while bringing little new to life, Disney is losing its brand magic. George Geis, associate dean at the UCLA Anderson School of Management, told the Christian Science Monitor: 'Clearly there has been an emotional attachment to the Disney name in our culture for a long time.' But, he says, the public's attachment to the old Disney name has changed to such a degree in the past five years 'that the special pixie dust is no longer there'.

If people once placed Disney in a class by itself they no longer do. The company's cleaner-than-clean image has started to look suspect. Associations with everything from Michael Jackson to fatal accidents at Disney theme parks and the current mini-controversy over the company's foul-mouthed holiday film Bad Santa and the ultra-violent Kill Bill have tarnished the brand.

But despite rumours that Disney and Gold will now attempt to stage a shareholder revolt to force Eisner's resignation, few expect such an effort to succeed. Eisner has deftly protected himself by commissioning and following new guidelines for corporate governance of the company.

However, analysts warn that Eisner may be on thin ice. 'I've watched Eisner for years and years,' says business management strategist Sam Hill. 'Any time you have cult CEOs that sort of hype up the company and hype up the brand and love the PR god, well, that's a two-edged sword ... You go up the curve quickly; you come down the curve quickly.'

Nevertheless, Eisner has a powerful argument against Roy Disney in claiming that Walt's nephew, not he, is blinded by deference to the company's founder.

As a measure of just how closely Walt's vision is guarded, Roy Disney recently complained about how his classic characters are marketed. He voiced concern about the way the characters behave in Disney video games and objected to plans for a line of white Mickey Mouse plush toys, saying that he felt the original design of Mickey Mouse was sacrosanct.

A few years ago, when Disney launched its Princess Line, a range of dolls based on famous Disney female characters, Roy Disney argued that to place one character in the context of another character's world was to desecrate that character's personal mythology and against the Disney way of story-telling. He might be right, but the line has become one of Disney's most popular products, with $1.3 billion in sales annually.

Roy Disney may have lost that fight, but he has not yet lost the battle. His supporters say they face a long struggle to oust the self-designated head mouse and hope to gather around them the thousands, perhaps millions, of small shareholders who, too, believe Eisner's reign has resulted in 'a cheapening of the integrity of the Disney company'.

The campaign, the opening salvo of which was loudly fired last week, will gain support, Roy Disney predicted to the Wall Street Journal. 'It clearly has struck a nerve with a lot of people.' At the end of the story, of course, he will be able to ride back into the Magic Kingdom triumphant. 'That would be the ideal, fairy-tale Disney ending,' he said.